The S&P/Case-Shiller national index rose a seasonally adjusted 0.7% during the three-month period ending in September, and was up 6.2% compared to the same period a year ago. The 20-city index rose a seasonally adjusted 0.5% for the month and 6.2% for the year.
What happened: Economists had forecast a 0.4% monthly increase, and a 6.2% yearly increase, for the 20-city tracker.
Case-Shiller’s national index regained its previous, bubble-era peak last year — and is 5.9% higher as of September. But the 20-city index, which is skewed toward the metro areas that experienced the biggest booms, is still 1.5% shy of its 2006 high.
Big picture: Home prices have surged in recent years as housing demand stirred to life amid ultra-lean supply. But Case-Shiller’s index, developed as a tool for tracking prices for real estate investors, may not capture the full story of what’s going on in the housing market.
An analysis by Trulia for MarketWatch shows that only 38% of U.S. homes have recovered their pre-recession peak. (That analysis is an update of a Trulia report from last spring, more on which can be found here.)
The two sets of data differ, in part because Case-Shiller’s is an index derived from observing price changes over time for a small subset of homes — and then extrapolating those across the broad market. The index also gives more weight to higher-priced homes, which are of greater interest to investors. In contrast, Trulia has individual price estimates of most of the homes in the U.S.
As Ralph McLaughlin, Trulia’s chief economist, told MarketWatch last spring, price trackers like Case-Shiller are a bit like stock indexes, like the Dow Jones Industrial Average DJIA, +1.09% , while data like Trulia’s is akin to the prices of individual equities.
Each method has its purpose, and each relies on assumptions. But using Case-Shiller to tell the story of how individual homeowners or neighborhoods may be faring “distorts the impression of how recovered the U.S. housing market is,” McLaughlin said.
Perhaps more striking is that McLaughlin thinks it will take years before all homes have regained pre-recession peaks. In fact, assuming a linear pace of recovery, that might not come until 2025, he thinks.
In September, Case-Shiller data showed that 16 cities saw annual prices accelerate from last month. Of three cities with monthly price declines, one was Seattle, continuing the trend of tepid monthly performances for one of the frothiest markets of the country.
Strong price gains were also seen in the FHFA’s house price index, released Tuesday. Nationally, prices were up 6.5% from the third quarter of 2016 to the third quarter of 2017.
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